The latest evidence that Wall Street analysts continue to consider customer loyalty a sound business investment: Over at Fox Business, Motley Fool commentator Bradley Seth McNew wonders if Whole Food's recent loyalty programme roll-out will help the high-end grocery retailer beat back the competition and unlock opportunity for investors. The short answer: Whole Foods faces real challenges, but the new loyalty programme positions the retailer for success.
Whole Foods faces headwinds familiar to a host of retailers in the era of rampant price wars and fickle consumers. To combate declining same-store sales, the retailer has introduced low-cost boutique stores in select markets, introduced digital coupons delivered through the mobile app, and lauched a loyalty programme in Texas and Pennsylvania. On a recent earnings call, the company said the programme will allow members "to save instantly on member-only deals like 10% off their first purchase, earn rewards for free products, and receive surprises just for shopping in our stores." The company plans to roll out the programme nationally in 2017.
As for whether the loyalty programme will improve the company's fortunes, McNew points out that diverting margin to low-cost stores and the loyalty programme will take time to pay dividends. Ultimately, however, McNew is sanguine about the company's loyalty strategy:
"If traffic stabilizes or sees growth with this new value and loyalty-focused strategy, larger baskets could eventually help lift same-store sales as well. Then location growth, especially with the launch of the 365 stores, could also drive higher earnings in the years to come. For those with a long-term focus, that would make that current stock price attractive- continue watching to see how the company's efforts play out."
Read the Fox Business article here.